Demand is growing to provide insurance coverage and treatment services for adolescents who abuse alcohol and drugs. Little information exists, however, on how treatment affects subsequent medical care utilization and costs. The main purpose of this study is to determine whether adolescent alcohol and drug abuse treatment affects subsequent medical care utilization and costs for adolescents and their parents. A secondary objective is to determine the effect of intensity of treatment. The study employs three groups: (1) a treated group, (2) a control group of adolescents who have been diagnosed but choose not to be treated and (3) a matched control group of adolescents who have not been diagnosed as having a chemical abuse problem. The major study hypotheses are that treated adolescents and their parents will show a greater amount of change in subsequent use of medical care services and that the resulting total costs will be less. The setting is a large HMO that has a comprehensive adolescent chemical dependency treatment program. The data derive from health plan records, treatment records, and medical charts. This study overcomes many of the shortcomings of past research in the area of offset effects which has focused exclusively on adults. It includes a large number of study subjects, two control groups, and one-year pre- and one-year post-assessment measures of utilization and costs. It controls for diagnosis and prior utilization, and measures the impact of treatment on both adolescents and their parents. The results of this study will provide new knowledge to the field of alcohol and drug abuse. The information gained can be used for guiding policy and for planning treatment programs for adolescents.